CMCO: Glove stocks shoots up!

Haih. The life of an Ah Beng is fraught with uncertainty and missteps. Limpeh’s gang made a killing yesterday but I found out today that we could have slayed for more. I am talking about glove stocks, of course. I sold all my holdings in Top Glove and Supermax for a very handsome profit. I did so in anticipation of the stock market retracing when the new season of Anwar’s political drama series airs today. I’ll buy again when it’s lower, I declared. I thought I was a smart trader.

Mana tahu, the government suddenly announced CMCO in the evening. Glove stocks have been uptrending during the third wave of COVID-19. Some good ol’ political uncertainty may present an opportunity for active traders to sell and buy again at a lower price and make money from the difference.

However, the monkey wrench of CMCO caused glove stocks to all shoot up today. I noticed that the performance of glove stocks is highly correlated with fear. COVID-19 cases increase = glove stocks trend upwards. Panic buying + CMCO = glove stocks skyrocket. It’s a barometer of anxiety.

People are afraid. The sudden CMCO announcement in Klang Valley has resulted in a surge in panic buying. I witnessed this myself at the local 99 Speedmart. There were several families purchasing instant noodles by the basketful! The shelves were almost bare. The cashier told me eggs were just restocked and they’re running out hours later. Limpeh also not immune – I bought two cartons of eggs instead of my usual one. 😄

The point is all this disquiet makes glove stock counters increase in value. By selling all my glove stocks yesterday, I missed out on more profits today. While, I can’t predict the CMCO announcement, I can make better trading decisions so I don’t leave earnings on the table. I make it a point to analyze my trading mistakes to find ways to improve. I’ve identified two ways I can do better in the future:

#1 Sell one counter only

Instead of selling both Top Glove and Supermax, I could have kept one and sold the other. All Big 4 glove stocks trend similarly so this would allow me to hedge my bets.

#2 Sell half the amount

Instead of locking in my profits by selling all my holdings, I could have sold half the amount instead. This would allow me to capitalize on any short-term uptrends in the future. If it retraces the next day, no worries, I bought both counters at a low price so I can always hold it longer.

These lessons are also applicable in our gang dealings. Extorting Timid Teck for the maximum amount may lead to him uprooting his family and running away to Gua Musang. You’ll lose all your capital and your future interest earnings too. Instead, consider shaking him down for something you know he can afford. Take a long-term view and extract the best possible Customer Lifetime Value (CLV) from him.

Hustle wisely, fellow Ah Bengs and Ah Lians.

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